Tuesday, September 30, 2014

The average house price fell for the first month in over a year according to September's Nationwide BS data.

A fall of 0.2 per cent was recorded between August and September, with the average UK property price down from £189,306 to £188,374.

Nationwide's chief economist, Robert Gardner, said "Price growth may soften further in the final quarter of the year, given the high base for comparison from 2013. However, the outlook remains uncertain. There have been tentative signs from surveyors and estate agents that buyer demand may be starting to moderate, but the low level of interest rates and strong labour market suggest that underlying demand is likely to remain robust."

Monday, September 29, 2014

You can zoom in and check out the average yield in postcode areas across the country.

The figures for the map have been calculated by taking the median annual rent and dividing by median asking price according to data drawn from home.co.uk - the data relates to 192,672 rental properties and 558,928 properties marketed for sale online on 12 September 2014.

I'm guessing it will be showing area with cheap property will throw up the highest yields, and areas with expensive property will be low yielding.

Offers are invited in the region of £900,000 for this former pub which was converted into student accommodation in Nottingham 3 years ago. Student rental accommodation has been amongst the most robust of all property investments even holding it's value during the slump induced by the "credit crunch". This property is not in the best of areas and with a yield less than 10% it's no steal given the high costs of management and maintenance associated with a student let.

Saturday, September 27, 2014

I've successfully remortgaged on one of my portfolio of buy-to-lets yesterday. Result. It brings to and end a penal rate of interest with the Leeds and Holbeck BS. More to the point I've gone for a 5 year fixed rate REPAYMENT mortgage with Birmingham Midshires at 4.34%. Whilst having to make a small additional capital repayment to bring the LTV down the result for me is I'm paying £100 less per month and at the same time paying down the debt.

I've done the maths and with the repayment element I'm looking to save about £10,000 over the 5 years. Things are looking just fine and dandy!

Then, just as I was sitting down to eat tea, basking in the success of my financial manouverings....a text. My tenant.

"Kitchen ceiling is dripping water. Can't be good. Shall I get Mick to have a look?"

Friday, September 26, 2014

Private landlords are commonly regarded as money grabbing opportunists, and yet it appears those in the public sector are just as self interested when it comes to it.

The chief execs and managers are seemingly not adverse to feathering their financial nests, even if that means siphoning away some twigs that might have been used to help provide better accommodation for someone who needs it.

According to Inside Housing, last year, the average chief executive handed themselves a 3.98% salary increase, despite the freeze on wages in many sectors of the UK.

According to the Guardian, the average chief executive in social housing, including bonuses, now earns £173,321, with the highest paid post hitting £322,316.

Nice work... maybe we need to move over to the public sector - just think of the pension.

Eric Pickles is set to announce a new £400 million 'rent to buy' initiative.

The Government is wanting to fund housing associations and social landlords in the offering of cheap loans to build new homes that will then be rented out at below market rates, capped at 80 per cent of local market value for a seven year period.

Following this initial period, tenants will be offered the chance to buy the property.

The scheme hopes to see 10,000 homes built during 2015 to 2017, and will be focused on helping young people onto the property ladder.

The Communities Secretary, Eric Pickles said. “As part of our wider housing programme, this new scheme will help increase the provision of low-cost rented accommodation and provide a springboard for young people to upgrade to home ownership down the line.”

The scheme will be open to those with a combined income below £66,000 a year, based on two people earning £33,000 each.

The tenancy agreement is the latest weapon in aspirant middle class parents gaining access to the best schools.

However, this can back fire!

Witness the recent court case of Lura Pacheco who forged a tenancy agreement in an attempt of trying to win a place for her daughter at a high performing school in Havering. Unfortunately, for her she was caught out by the property's real owner and subsequently fined by magistrates £500 for the offence of forgery. To read the full story have a look at the Mail.

Is this a case of postcode envy or a legitimate act to get the best for your children?

Thursday, September 25, 2014

ARLA's latest quarterly report reflects concerns that the supply of rental property is not able to meet tenant demand.

The association of letting agents report a shortage of supply as more landlords are selling property than buying. The first time in four years that ARLA have recorded this negative imbalance.

ARLA said 68% of their letting agents had more tenants seeking a rental property that there were rental properties available. The quarterly report also shows a drop in managed properties on letting agency books, with the agency average falling from 143 to 135.

ARLA predict this trend to continue, as their member report an increase in the number of landlords selling property and a fall in those buying.

ARLA's Managing Director, David Cox, comments:

“This quarter, we have seen demand for properties in the rental sector significantly rise, while the supply of residential rental properties has dropped. This activity has bucked the seasonal trend recorded over the past 11 years for this quarter, in which we normally see an increase in the number of new tenancies signed up. However, with landlords not investing in new BTL property tenants are finding it increasingly difficult to secure contracts.”

Wednesday, September 24, 2014

Labour's proposal of a mansion tax is political posturing at its worst.

It is Ed Miliband saying to the common man, "Look, we hate rich people! Please vote for us....... " before forgetting the rest of his speech.

I'm disappointed in Ed Miliband, his policies are sounding so inconsequential. Instead of putting forward a coherent and decisive strategy to make the UK more equal, he is out to patronise, offering up these moronic policy nuggets in hope they might appear greater than they really are.

We have three main parties in England, each offering the exact same political cake, but for the colour of the icing. Instead of three victoria sponges, voters want coffee, walnut and carrot. We want a real choice instead of this pretend version. No wonder nobody bothers voting these days.

I was hoping that post 'New Labour' we might get something different, more left, but sadly we have a party lead by Blair's B-team, with a centre forward that really should have been left back - in the changing rooms ( that's an Ed Miliband style pun for you, painfully funny I know. )

These misfits are desperately trying to appear connected to real people, when quite clearly they are not, and never at any point in their lives have been. Listening to the two Ed's is like sitting through David Brent at his most cringe-worthy sincere - the toe curling embarrassment of their speeches makes me perspire.

Ok, end of my rant, and back to mansion tax proposal - it's a rubbish idea.

The premise that if you live in a £2 million pound house you should pay 1 percent of its value is ridiculous and totally impractical, and I can't begin to imagine the kind of games and disputes that will go on for those living in properties around the £2 million figure.

If Labour do get into power, expect a long list of embarrassing data releases, until after a wasteful couple of years the policy is dropped.

RICS response about the proposed mansion tax was" a classic pre-election sweetener that would be unfair, fraught with unintended consequences and which could not cover increased NHS spending alone."

Surely, there are better and simpler ways of increasing the tax burden on the rich?

Tuesday, September 23, 2014

Housing minister, Brandon Lewis doesn't appear to share the same enthusiasm for the award winning Urbed plan for a Government led kick start in the building of a series of new garden cities across Britain.

In his interview with the Architects Journal, Mr Lewis described the concept as “urban sprawl”, going on to say, “We are committed to protecting the green belt from development as an important protection against urban sprawl. Instead, we stand ready to work with communities across the country who have ideas for a new generation of garden cities and we have offered support to areas with locally supported plans that come forward.”

Good luck with that one.

The NIMBYs will win the majority of local battles, and any real injection of new property will remain a long time coming.

The new Housing Minister is clearly not wanting to upset any Tory voters.

Failure to tackle the country's chronic housing shortage can only be seen as good news for landlords/ property investors - house prices and tenant demand will remain amplified.

Unfortunately, it isn't such good news for the homeless, FTB's or parents with children who won't ever move out.

The landlord has already been fined twice for failing to comply with an improvement notice issued back in 2012, first £1,200, then after a further hearing, another £3000 plus £200 costs.

Having been served with a notice in April 2014 under Section 235, Housing Act, requiring him to submit documentation to the Council outlining fire and safety certification, the landlord has continued to ignore the council's request and has been fined a further £200 for the offence, £200 costs and a £20 victim surcharge.

Councillor Bob Derbyshire, Cabinet Member with responsibility for Regulatory Services added: “This was a particularly serious case where a rogue private landlord thought it acceptable to ignore the legislation that is in place to protect tenants. The council will continue to pursue this minority of landlords in the private sector in order to ensure that people are housed in conditions which do not pose a risk to their health or safety.”

The high cost of property means that people are increasingly accepting less space. This acceptance of less has lead to a relative increase in demand for smaller properties, more often flats by first time buyers or investors.

The situation has been compounded by the cost differential homeowners face in moving out to a larger property.

According to Halifax's latest data, the price of flats have outperformed other property types, with increases in their value of 32% during the past ten years, more than twice the 15% rise of the average property.

This strong performance can be partly be attributed to the over-heating in the London the market, where there is a predominance in the supply of flats.

Terraced houses have also performed well, in many other regions, due to their relative affordability.

Martin Ellis, housing economist at Halifax, commented:

“There has been a significant increase in the number of first-time buyers since 2010 compared with a modest decline in the number of those moving home. This difference is reflected in a bigger rise in prices over the past five years for those property types that are most popular with first-time buyers: flats and terraces.

"Since 2009, larger property types - such as detached homes, semis and bungalows - have underperformed flats and terraces. The demand for such properties has been partly constrained by a widespread lack of equity amongst homeowners who bought for the first time around the peak in the market. Many of these homeowners are still finding it difficult to finance a move to a larger home."

Like a dog with a bone the 2 Eds seem determined to press ahead with their crazy promise of rent caps or what the Labour luvvies call euphemistically controls over "excessive rental increases". This week at the Labour Party Conference in Manchester the Leader seems certain to put his stamp of approval on it and for it to be official party policy.
This concept of rent cap/controls that could only be contrived by a load of out of touch politicians clearly positioning themselves to grab votes from 'generation rent'. Recent research shows that rent controls don't work other than to distort the market, create a lot of work for bureaucrats and legislators and generally confuse both landlords & tenants. Still what do they care about the fall out, they are just there for somebodies vote.

History tells us a lot about rent control
I'm a great fan of history. It tells us a lot. A cursory look at the history books shows us rent controls in what ever shape or form don't work. Simply by calling them something different like "New rent controls or rent caps' will not fix the fundamental flaws. Perhaps Labour should take a look back before making promises to the electorate that don't add up.

Monday, September 22, 2014

Recent activity in the buy-to-let mortgage market has presented me with a few perplexities. During the month of August, a considerable number of lenders reduced their buy-to-let rates by between 5 and 50 basis points, including Precise, Virgin Money, Leeds Building Society, Platform, Clydesdale and Godiva. The immediate question that springs to mind is ‘why?’

Often buy-to-let interest rate changes correlate with movements in the money markets, but Libor rates and short-term swap rates have been pretty stable over the last few weeks. This would suggest that something other than the cost of money may be driving the downward trend amongst these buy-to-let lenders as it can only mean a reduction in profit margins.

It occurs to me that one of two scenarios could be the reason behind the recent buy-to-let rate reductions. The first scenario is that lenders have an increased appetite for buy-to-let loans and have cut their rates in order to become more competitive in the marketplace and drive higher levels of new business. This is quite feasible given the strong performance of buy-to-let books in general and the overall increase in mortgage lending during the first half of this year.

The second scenario is that buy-to-let business for these lenders has slowed down and the rate reductions are a tactic for increasing volumes in order to meet their existing lending targets for the year.

There have been mixed messages from lenders suffering from processing backlogs. It is not clear whether delays are due to an increase in buy-to-let applications or caused by resourcing issues such as staff sickness and holidays. Either way most lenders have backlogs with some lenders currently up to 18 working days behind, which really is unacceptable.

Of course, the situation is probably different for every lender and there could be other factors in play that are not apparent to an outsider looking in. Either way, increased competition in the buy-to-let mortgage market is always good news for landlord clients, who will be keen to take advantage of the excellent deals on offer. Let’s just hope that lenders can maintain their service standards at the same time.

One lender which may be bucking the trend is Kent Reliance. It has recently increased its minimum loan size from £50k to £100k for its standard buy-to-let range and from £75k to £150k for its HMO and limited company range. There has also been an increase in interest rates across its range of large buy-to-let loans, so it is reasonable to deduce that these changes have been implemented to stem the flow of business.

As the only lender offering 85% LTV buy-to-let mortgages and also specialising in areas such as HMOs, limited companies and student lets, Kent Reliance may have become a victim of its own success. It would be a really positive move for the buy-to-let mortgage market if a few more lenders were competing in the 85% LTV space and offering further options for niche buy-to-let cases.

IMPORTANT! Due to current market conditions, lenders are withdrawing and replacing products with little or no notice. Please check our website regularly to see the most up-to-date products available.

There are an increasing number of online platforms offering crowd funding on BTL investments.

It's this week's buzz in the property investment circuit.

The premise that a property investor can raise investment from individuals and cut out the need for the financial institutions using an online crowd funding platform is kind of nice ... pure .... power to the people and all that, in principle anyway.

However, in reality the concept is high risk. Long term returns are impossible to predict, with so much reliant on the economy's wind direction.

Attracting property finance from detached investors has a long track record of sharks, charlatans and misguided psychopaths. It's another reincarnation of the 'Property Clubs' that burnt so many unwitting investors.

This time its using a platform, and a smiley website, and the pretence that it is freeing us from the shackles of the financial institutions.

It all sounds so liberating.

However, I won't be surprised when the wave of news stories start. Pictures of glum faced investors telling of their lost savings thanks to an unwitting landlord or unscrupulous con artist.

Fools are easily parted from their money - be warned, the ideal is never the reality.

BTL royalty, Fergus and Judith Wilson, have said they are close to securing a deal on the sale of their rental portfolio. Three separate Chinese investors are said to be the front runners to secure the deal on Fergus's, 1000 strong portfolio.

The Kent landlord says the sale is “highly possible and approaching probable.”

He is holding out for a £250 million price on his tenanted portfolio, which after paying back loans and costs, should bag him around £100 million to see him through his retirement.

Saturday, September 20, 2014

I face a problem faced by many suburban landlords. It's called garden maintenance. It's a real problem. Not one that I have probably appreciated fully until recently. The general theme is that we are a nation of gardeners. Well that may be the case until you are a landlord with lots of gardens.

The reality is that keeping on top of garden maintenance is a time consuming business. Time that most landlords don't have. Sun and warm wet weather, create absurd amounts of vegetation growth.

The problem for landlords is that tenants don't want to maintain a garden, and employing a gardener is expensive, particularly in good areas where there is a general view that garden maintenance is a justifiable tax on the middle classes.

On top of this, neighbours are less than understanding, seeing the excessive, unkempt growth as an afront to their suburban Truman show like dream.

My potential solution.
I have just signed up for Hugh Furnleigh Wittingsalls Landshare Scheme. I like the morals - share more and waste less. Could the use of my large overgrown garden as a communal allotment be the answer?

It may even produce food for my tenants. I will shortly find out, but if it does work it could be a win. win scenario.

Thursday, September 18, 2014

It has been decided that letting agents, like booksellers, are no longer welcome on the high street. The internet has decided it will provide this service, better and cheaper.

It has also been decided that a one-stop service, placed under a clear, singular, recognisable brand is what we all want. Big business wants to get in on the sector, to take over, to make everything swish and corporate. It has been decided. The lettings world will be shaken up and stamped upon by the internet .... it will be so, that is a certainty, for business logic has decided it.

However, one thing might stop their rise. Landlords!

Landlords are odd, aren't we? Landlords are individuals, proud outsiders, free thinkers. Landlords are not sold on brands like those wage slaves that cower down to their corporate masters.

Personally, large corporations turn my stomach with vile contempt. I hate corporates. They are money grabbing enterprises of absolute and pure evil ( too much bile? - sorry ). Personally, I boycott Amazon. I hate them. They symbolise the worst of the internet. They eat choice, destroy human interaction, gobble up tracts of a nations disposable income, then spit it offshore without paying any tax.

I don't think my sentiments are a rarity amongst landlords.

However, more importantly, neither do I think landlords will lose sight of the fact that these new brands are only selling services that are already available. These are simply a re-package. A collection of services already available, popped into carefully presented box with a big corporate bow on. They are aggregators of existing online services, and they are hoping to charge you extra for this simplification and the perceived trust in their brand.

It's as if they think we are dribbling morons, who don't know how to use Google. ( Pass me a hanky.)

Be wary though, they might be offering a discounted price on their headline service, but their business model is to claw this back by pumping up the prices on their bolt on services - tenant referencing, inventories ... , services available, no more than two clicks away on a mouse, at a lower cost, by a specialist online provider.

I think most landlords are savvy enough to realise this.

I've just flown to France with Ryan Air. The flight was headlined at £29.99, but then, after baggage, taxes et al, I had a final price of £176.50. This same business model is clearly what they are hoping to replicate.

So, with the launch last night of the 'Easy' branded, Stelios fronted, online letting agent, Easy-property, it signifies that the corporates are coming to take over the letting industry.

Get ready to wave goodbye to the high street agents that had moved into that vacated bookshop.

On Property Hawks Training new one day course we will show you how to fill out the N5B form in our one day workshop so that you have the confidence to fill out this vital court form and can gain possession of your buy-to-let property legally. If you were to engage a solicitor to fill and out and prepare this one form alone it could cost a landlord easily £500 in fees. Let our expert trainer Rebecca Brough Partner at Fidler & Pepper demystify the legal jargon so that you can fill out the 5 page document with confidence and start to get your property back. At £95 for the day including lunch it represents a sound investment in a landlords time & effort.Letting Essentials - practical landlord training

“We usually see a price fall at this time of year as potential home-movers are generally still in holiday mode. However, it looks like there are early signs of a bounce-back in demand after the summer lull, leaving those estate agents with a shortage of stock at a potential disadvantage and therefore eager to attract new instructions.

While there is more property coming to market this year, it has been more than swallowed up by increased sales. There is already 10% less property available per estate agency branch compared to this time a year ago, and with enquiries by phone and email to agents up by 16% compared to August last year, and at near record levels, you can see why there has been an earlier than usual price pick-up. The ability of potential buyers to remain on-watch and in-touch and react more quickly is also a factor. While you may be switched off from work during the summer break, many people’s mobile devices are still switched on to the internet to see what’s coming to market.”

A recent survey of tenants into what they really want reveals a tenants wish list:

The initial choice of choosing a rental home is based on the number of bedrooms in the rental property, followed by prices. No big surprise there. Tenants appreciate a central location and also they like to be new work and shops according to landlord insurance company Axa. I would add in particularly for younger tenants a good bar or too and for your older tenants and those that appreciate a good pint of craft beer a decent real ale pub.

Surprisingly, the top feature demanded by tenants of a rental property is a garden which is stated as important to 35% of tenants questioned. The use of garage is 2nd on the list of most desirable features.

A Tenants turn off

The big turn off for tenants is dirt and grime. A landlord might be advised therefore to invest in a full house clean before marketing. Tired decor is unsurprisingly another big turn off so landlords need to get their paint brush out and do a little bit of touching up before marketing their property for let.
No big surprises in these figures apart from perhaps the appeal of the garden.

Clean and tidy is the name of the day…clearly or should it be cleanly!

Gas Safety Week 2014 starts today. Co-ordinated by the Gas Safe Register with support from the gas industry including retailers, manufacturers, consumer bodies and the public. The week aims to highlight the importance of regular checks on gas appliances.

A survey of Gas Safety Register engineers reports that 1 in 6 properties they attend have an unsafe gas appliance.

Birmingham is thought to be the worst place in the UK for gas safety with one third of homes thought to have an unsafe gas appliance.

Russell Kramer, chief executive for Gas Safe Register, said: “Over the past three years there’s been 31 deaths and over 1,000 injuries that have resulted from gas related incidents.

Saturday, September 13, 2014

For most of us landlords we spend a lifetime building up a portfolio of residential properties. Inevitably this sort of landlord ends up with a mixed bag of property investments. A little bit of this, the odd flat the odd terrace a couple of semis.

Blocks of flats give opportunities

I admire landlords who have brought nice self contained blocks of apartments where they own the freehold and can also make additional cash through the service charges and ground rent. If you are cash rich and are looking at acquiring a mixed bag of property how about this portfolio of 251 properties available through Allsop.

It generates over a million quid in rent and I'm guessing there are a number of opportunities for arbitrage. Offers are invited but personally I wouldn't be looking to pay anything more than £10 million. This sounds a lot but given the management costs of this portfolio it seems fair. The properties available are:

236 houses and 15 flats
Located throughout the country, with a regional bias in the East and West Midlands
Subject to 144 assured shorthold tenancies, 19 assured periodic tenancies, 4 assured tenancies, 59 regulated tenancies and 25 vacant properties
Total current gross rent reserved £1,146,807 per annum
Estimated reversionary income £1,300,000 per annum upon letting all vacant units
Further opportunity to enhance rental income as tenancies expire.
If it wets your appetite more details and offers can be made via:

I will soon be sending you a statutory notice under paragraph 18 of Schedule 23 to the Finance Act 2011 requiring you to send me a
return of information.I believe that your business may involve acting as a letting agent on
behalf of property landlords. I am writing to let you know that I will
soon be sending you a notice under the above legislation. That notice
will require you to send me a return of gross rents that you have
collected in the year ended 5 April 2014 on behalf of property landlords
(including limited companies).What information will I want from you?We need to know about rents you have collected from tenants on behalf
of landlords who have used your letting agency services in the year
ended 5 April 2014. We will use that information to check that the landlords declare the rents on their tax returns. To
request this information I will soon be sending you a statutory
information notice. This notice will require your return within 60 days
of the date of the notice. This is not a check of your tax
affairs. We will only use this information to check that landlords have
declared their rental income correctly.….In respect of each landlord you will need to give the following particulars in your return:- the name and address of the landlord for whom the rents were collected;- the total gross rent collected from the tenant for the landlord for the year ended 5 April 2014;- the address of the let property to which the rent relates

This warning to landlords using a letting agent shows that the HMRC continue to look to find landlords that don't declare their rental income and using 3rd party sources of information is very much part of their strategy.

Zoopla's price estimate data seems to be about as accurate as a drunk myopic archer shooting in a gale.

I've just had a look at their price estimates for a street I know very well. The street is lined with Edwardian semi's, all pretty much identical, in size and layout, but with some more spruced than others.

I would factor in a £100,000 price range to cover the worst to the best, dependent on condition, outlook and layout.

The IEA report, entitled The Flaws in Rent Ceilings, considers that the implementation of Labour's proposals would result in higher initial rents, a misallocation of housing and a reduction in the supply of homes to rent – without improving affordability.

The study questions whether existing tenancy law results in high levels of insecurity of tenure in the private rented sector.

The report recounts the disastrous impact on the private rented sector during the period between 1915 and 1989 when rent controls were last in use, and the sectors subsequent recovery since their abolishment.

The report makes clear the solution will not be found by over governance of existing supply, but by meeting demand by relaxing planning and building more property. The IEA are calling for any new government to introduce policies to stimulate investment in the rental sector and encourage investors to provide quality affordable rental property.

The report list the problems with tenancy rent controls as:

Landlords increasing rents to compensate against future uncertainty over increased security of tenure.

New tenants could face high start rents as landlords insure against within-tenancy risks and compensate for future losses.

Security of tenure is not a major consideration for the majority of those groups dominating the private rental market, namely young people, students and more mobile households. Over 35% of private renters remained in residencies for less than a year in 2013. Because rents will be initially higher, fixed term tenancies would allow less mobile households to enjoy low rents at the expense of the more mobile – harming labour mobility.

Landlords will make the highest profit at the beginning of a tenancy and will seek out tenants that are likely to be more mobile. This increased selectivity would make it increasingly difficult for households seeking longer tenancies to find accommodation, further fuelling the UK’s housing crisis.

The existence of tenancy rent controls is likely to result in maintenance being carried out between tenancies rather than during them, compromising quality for some tenants.

While previous forms of rent controls were ultimately unsustainable due to their shortcomings, rent regulations such as these would prove extremely difficult to reverse. Statutory bodies that support the policy would have a vested interest in its maintenance and tenant lobby groups would gain the upper hand over small landlords, young people and mobile households.

Commenting on the research, Mark Littlewood, Director General at the Institute of Economic Affairs said:

“It is absurd that households across the UK have to pay such a large proportion of their monthly income on rent. But imposing rent controls on the market will do nothing to improve affordability, and will simply result in a number of perverse incentives that will harm those very individuals which such a policy sets out to protect.”

“The government needs to wake up to the fact that only through increasing the supply of rented accommodation can we really address the problems of high rents and poor tenancy security. If we are serious about helping the most vulnerable in society, we need to radically liberalise planning laws so we can build more houses."

Figures from the Joseph Rowntree Foundation claim the Minimum Income Standard ( MIS) ( the amount of money required to pay for what is perceived as a basic reasonable standard ) has risen sharply since it was first calculated in 2008.

A single parent with one child now needs to earn £27,000 up from £12,800 in 2008.

A couple with two children now need to each earn £20,220 up from £13,900 in 2008.

A single person now needs to earn £16,200 up from £13,500 in 2008.

The sharp rise is due to inflation in basic goods and services, changes in tax thresholds, and rise in rents.